Paul Viviers, a director of PM Sight, an end to end solutions company dedicated to optimising business performance through portfolio and project management, says: I used to think that the most fundamental metric was the 'bottom line'. After all, business needs to generate profit. The return on investment (ROI) tends to be the driving factor for implementing specific projects and ultimately the measure of their success. If the return is good (and I generally think in terms of Rands and Dollars), then obviously it is a good project and a smart decision to implement it. However, after reading numerous articles and publications on different approaches for evaluating value, I am slowly altering my perspective.
 
Many executives are turning toward the 'balanced scorecard approach' to determine the value of project management in their organisations. They believe that many other, more intangible, benefits will accrue but not show in the ROI calculations. So what should one measure to determine the benefits of implementing project management disciplines within an organisation?
 
Certainly ROI plays a critical role. ROI measures how effectively assets are used to earn income, says Viviers. Financial measures alone, though, do not present a clear picture of the value. They often do not represent a clear sign of the future measures. To truly evaluate effectiveness, financial measures must be supplemented with non-financial ones.

According to the Centre for Business Practices, research shows that creating value for stakeholders is the key to organisational success. Companies that stress shareholders, customers, and employees outperform firms that do not. Over an eleven-year period, the former increased revenues by an average of 682% versus 166% for the latter, expanded their workforces by 282% versus 36%, grew their stock prices by 901% versus 74%, and improved their net incomes by 756% versus 1%.
 
A balanced family of measures for determining the value of project management might include:
 
Financial measures: economic value-added, return on capital employed, sales growth, productivity, cost savings, earnings per share.
Customer measures: customer satisfaction, customer retention, customer acquisition, customer profitability, market share, customer use.
Project/process measures: cost performance, schedule performance, meeting technical specifications, quality, resource utilisation, time-to-market, project completions, project risk.
Learning and growth measures: employee satisfaction, employee turnover, training time, employee productivity, employee motivation, employee empowerment, information system availability.
 
Viviers says: Effective metrics are leading indicators, they forecast future trends inside and outside the organisation. They need to be inexpensive to collect, appropriate, comprehensive, quantifiable, and statistically reliable.
 
If you can balance your scorecard with these measures, you will have the perfect measure to evaluate your project management effectiveness, he adds.

The Project Management Institute (PMI) performed a study on the Benefits of Project Management (Bill Ibbs and Young-Hoon Kwak) which theorised that benefits increase as an organisation increased its enterprise project management maturity.
 
Currently, the PPMForum is surveying organisations to effectively measure the value of project management. The focus is to move beyond the ROI calculations and more toward the 'balanced scorecard' approach in measuring project management value.
 
As an executive or manager, you might want to start quantifying the value of project management. Start capturing metrics to validate the investment your company is making in enterprise project management, Viviers concludes.